Joint Venture Case Study
A joint venture is a contractual agreement joining together two or more businesses in which each agrees to share profit, loss, and control in a specific enterprise. While a joint venture might seem similar to a partnership, there is one key difference that sets them apart. Members of a partnership have joined together to run a “business in common,” while members of a joint venture have joined together for a particular purpose or project (Ward 1). The joint venture in our case is between Hangzhou Wahaha and Danone, which was formed by the two companies to gain a competitive advantage in the food and beverage industry. The Chinese company, Hangzhou Wahaha Group, was the country’s leading beverage manufacturer at the time of the joint venture’s inception. China’s adoption of the Open Door Policy paved the way to an economic reform, in which the result was economic growth and an increase in consumer spending. This reform paved way for Zong Qinghou, who would later found the Hangzhou Wahaha Group. Group Danone, a French company, specialized in selling a variety of food and beverage products. The two companies came together in 1996 to form this joint venture partnership; however it wouldn’t be too long before a dispute would arise out of this contractual agreement. Hangzhou Wahaha Group (“the Group”) was founded by Zong Qinghou in 1991. Zong had showed his ambition long before he founded China’s leading beverage maker, as he worked his way up at the school-run enterprise where his mother had worked, and later decided to begin a venture of his own. He set up his own business at the school, which began by selling soft drinks, stationery, and popsicles. His business would later evolve into Hangzhou Wahaha Nutrition Food Factory, where he sold a children’s nutritional supplement. Two years later, in 1991, his business strategy had proved to be quite successful. As a result of their success, Hangzhou Wahaha Nutrition Food Factory bought shares in Hangzhou
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